Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

I am very conscious that I have been out of the meeting for most of the day. I am just going to ask one question and if it has already been covered, I am happy to withdraw it and take a look at the transcripts. I thank both the witnesses. My question is on the quantum of the tax base. I do not expect the witnesses to make any political judgments but I would like an economic view if they feel they can give one. There is a debate going on about whether taxes should be cut, kept broadly where they are or raised. As far as I can see, we are heading towards an ill-advised erosion of USC, which is efficient, highly progressive and brings in a lot of much-needed money. However, a sort of stealth tax will result from not indexing income taxes. That will, in essence, raise tax in other areas. How it all balances out, I am not quite sure. I note to the Chairman that it would be quite interesting to see if the committee could get some analysis on that. If USC goes down, as it appears the Government will propose, tax will go up in other areas if the indexation the ESRI has referenced does not happen. It would be interesting to see how that all balances out. I am not sure if it would be the ESRI or some other body that would do it, but it would be useful analysis to have. My question, however, is really more around judgment. I am of the view that we should not erode the tax base either in terms of its breadth or the total quantum. The reason is that, when I look at other European countries which are broadly social democratic, we appear on aggregate to have significantly less tax take to a few percentage points and significantly less investment in public services, social infrastructure, capital and so forth. Regardless of whether USC or income tax should be touched or whatever the right mix of those things is, can the witnesses give the committee a view as to whether the level of taxation it looks like we are moving towards, according to the broad outline of what is going to come up in the budget, will be enough to maintain and progress public services and investment in productive capital infrastructure? There are lots of places where we could become more efficient in our spending, such as health care. It may be that the answer is that we have enough taxation coming in for health care and the issue is better spending of the money. However, my question is about the position in the round and bringing it all together to allow Ireland to progress to having sufficient broadband, infrastructure and public services while taking into account socio-demographic pressures. For example, good-quality health care is becoming more expensive per person as we live longer. Perhaps really high-quality education is becoming more expensive. It may be that in terms of getting back to reasonable levels of third level performance, we are €1 billion behind. There are lots of different elements to this. Can the witnesses at this point give the committee a view as to whether we have enough coming in, putting ideology and political considerations aside, to allow really good-quality public services, social protection regimes and all the things for which we use our taxes? Is more coming in than we need, and can we pull back if we become better at spending the money, or should we be looking at having a conversation about increasing the total tax base by a material amount as we think about the next three, five or ten years in order to move from what appear to be strained public services and under-investment in capital to adequate levels of those things?